November 9, 2005

 

CBOT Soy Review on Thursday: Up on Spec position evening

 

 

Soybean futures on the Chicago Board of Trade ended Tuesday's session posting modest gains, supported by light speculative position evening following declines in the two prior sessions and ahead of Thursday's crop report.

 

November soybeans ended 2 3/4 cents higher at US$5.74 1/4, January soybeans finished 2 1/2 cents higher at US$5.85 1/2, December soymeal settled US$0.20 lower at US$173.90 a short tonne, while December soyoil ended 14 points higher at 22.81 cent a pound.

 

Speculative short covering served as the catalyst for the gains, with light technical buying surfacing amid the most-active January contract's ability to hold support at Monday¡¯s low, analysts said.

 

Trade ideas that Monday's declines were a bit overdone set the stage for the advances, as the market was seen overdue for a consolidation bounce with traders evening positions to avoid any bullish surprises in Thursday's reports.

 

Nevertheless, large production forecasts, a lagging export arena, and concerns over the spread of bird flu remain fundamental hindrances to any significant near-term rallies. Overall activity was relatively quiet, as the market continues to hover within the parameters of its recent trading range awaiting fresh market-moving inputs.

 

Meanwhile, the Brazilian Census Bureau, or IBGE, forecast Tuesday that soy production will reach 58.74 million metric tonnes in 2005-06 (October-September), up 15% on the year before. Despite the increase in production, the estimate continues to lag the U.S. Department of Agriculture's current projection of 60 million metric tonnes.

 

The average of trade estimates from a survey of industry analysts by Dow Jones Newswires peg 2005 U.S. production at 3.016 billion bushels, up from the USDA's October projection of 2.967 billion. The average guess among analysts in the survey pegged the 2005-06 carryout at 313 million bushels from a range of 270 million to 351 million. USDA in October estimated ending stocks at 260 million bushels.

 

In pit trades, Citigroup and Calyon Financial each bought 500 January, Bunge Chicago, and Term Commodities and Man Financial each bought 200 January. Rand Financial sold 600 January, Merrill Lynch and Tenco each sold 300 January.

 

South American soybean futures ended modestly higher. The March futures settled 1 3/4 cents higher at US$6.15.

 

 

SOY PRODUCTS

 

Soymeal futures ended narrowly mixed, emerging as the weakest link in the soy complex. Consolidation from recent price action produced a sideways trading session, with growing concerns over the spread of bird flu and its impact on global feed demand weighed on prices. Rumors circulating that China canceled some previously bought Indian soymeal supplies due to reduced feed demand added to the bearish uncertainty in the market.

 

Soyoil futures finished higher across the board, bolstered by spillover momentum from soybeans, an overdue technical bounce and solid underlying commercial buying interest, traders said.

 

December oil share ended at 39.61%, and the November/December crush was at 59 1/4 cents.

 

In soymeal trades, buyers were scattered among various trading firms. Bunge Chicago sold 300 December, Kottke sold 300 January, and Goldenberg Hehmeyer and Prudential Financial each sold 200 December.

 

In soyoil trades, Bunge Chicago bought 900 December, and Iowa Grain bought and Citigroup each bought 200 December. Shatkin/Arbor sold 300 December, Cargill, Fimat, and O'Connor each sold 200 January.